NEW YORK, March 19, 2020 (GLOBE NEWSWIRE) -- The world is in a state of fear and anxiety. It’s all hands-on deck. Governments, healthcare entities, businesses and citizens must all come together to survive the crisis and begin to thrive again. In order to provide key insights and recommendations that are actionable, Luxury Institute reached out to all members of its Global Luxury Expert Network who are operating at the front lines of the global luxury industry to get a crowdsourced view of the situation. Here are their insights and recommendations in a time of crisis.
The Most Significant Consequences Of COVID-19
- The Chinese consumer has been shaken and economically hit hard by these events. It remains to be seen if they continue to be the engine of growth for the luxury industry, or if their values and purchasing habits change.
- Affluent consumers’ fear and uncertainty related to their personal and loved one’s health will be exacerbated by massive stock market losses that will generate a near-term sense of financial loss. These will cause affluent consumers, as well as mass market consumers who buy luxury periodically, to pull back sharply on spending medium term.
- The inability to travel will dramatically affect the airlines, luxury and premium travel and tourism, travel retail, global conferences and events, and the entertainment and sports industries most. This will last several months.
- Luxury goods supply chains will be affected by Chinese and European dislocations. They will be fixed, but a major loss has already taken place and will reverberate for months. Alternative supply chains will be seriously considered.
- The effects on the global luxury workforce will be severe unless governments and brands step up to protect these precious members of the industry.
- Digital capabilities and skills are very important right now and will become even more so in the long-term. It remains to be seen if luxury consumers revive their appetite for in-store experiences at the same levels as pre-crisis, which were somewhat declining in any case. Some experts think that most of whatever can be done online will be done online in the future.
- Many uber-wealthy consumers have escaped the major cities in their private jets to their enclaves and are hunkering down and assessing the meaning of their lives. It remains to be seen how they are affected, but no one will escape the mental and behavioral effects of the transformation.
What Changes Can We Expect As A Result Of This Pandemic?
It is difficult to predict how the crisis will rewire the needs and wants of all luxury consumers, and brands alike, but as in all major crises in history, there will be long-lasting effects in perceptions and behaviors.
Members recognize that predicting the future is a futile exercise for the most part. Here are some areas of question that Global Luxury Expert Network members believe will be considered and/or reconsidered by affluent consumers and brands in light of the pandemic:
- The marketing of sustainability as a brand badge vs. the need to fully address true sustainability. When will the window dressing stop and when will companies get serious about implementation?
- Why can Big Data and A.I. be so efficient in serving up luxury ads, yet so impotent and useless in a crisis such as a pandemic? Why have our best young minds chosen to be digital mercenaries instead of societal missionaries?
- With all the fake “authenticity” that abounds in luxury and premium offerings, where will consumers turn to for the true authenticity and safety that they crave and need?
- What will change in the ways luxury clients choose to engage with brands? Will they now seriously only engage with brands that share and prove their humanistic values?
- Will luxury brands continue to engage in mass production to grow at all costs, and will there be new true niche luxury brands that emerge as winners?
- How will Millennials and Gen-Zs emerge from the crisis economically, and what will be their mindsets with regard to luxury? Will these be long-term effects or short-lived?
- Will the pandemic delay, or accelerate, the global generational wealth transfer?
- Will clients insist upon transparent supply chains, and truly support locally sourced products and services?
- How will luxury travel attitudes and habits change as a result of the pandemic?
- Will the uber wealthy and wealthy again more strongly seek to alienate themselves from others such as in private clubs and communities, as was more common in the past?
- Will luxury brands retreat from third party retailers and choose to build direct and exclusive client relationships?
- Will the global recession be quick, or last several years? How many luxury pretenders and financially weak brands will disappear?
How Long Will The Crisis Last?
The reality is no one knows for sure. According to GLEN members, here is the range of estimates as to how long the crisis may last:
- 1-3 months: 11%
- 4-6 months: 27%
- 7-9 months: 16%
- 10-12 months: 24%
- Over 12 months: 22%
Recommended Responses From Governments And Brands
Manage the fear and uncertainty that everyone has, naturally, and instead take clear, decisive action now to protect employees, partners, clients and communities. Financial sacrifice to do so now will build huge goodwill and trust for the future.
Resist the temptation to contact clients during the crisis with marketing or selling techniques that pretend to care, yet, are disingenuous. They will be seen for what they are. If you have genuine human to human relationships with clients then act accordingly, human to human, out of genuine concern.
Trust that while most governments acted late, the right measures are finally being taken in most countries, and social distancing will help dramatically. Ultimately, people are rational, and have a very strong instinct for survival. Fear is your friend at this moment because it inspires survival tactics. Panic is useless. Government needs to help prevent panic with medical and food supply chain resources, and dramatically strong economic stimulus. Trust is earned or depleted with every move.
Rethink all your investments for 2020 and eliminate the hobbies. Continue to invest for the bright future because humanity always falls forward, then gets up, then sprints. Technology will be a critical investment, but don’t be fooled into thinking that bricks and mortar, and trusted expert advisors, will not be a big part of the equation for high value luxury goods and services. In true luxury, expertise and emotional intelligence will always matter most.
After you take care of the immediate and urgent needs, begin to thoroughly research and brainstorm solutions and innovations based on the effects and needs that employees and clients will have in the transition and aftermath of the pandemic. As one GLEN member put it, in asking the hard questions that a pandemic generates “more than ever, luxury needs to be part of the solution, not part of the problem. Luxury needs to have a soul.”
Consumers and employees will be scrutinizing brand leadership for true expertise, deep empathy, trustworthiness, generosity and kindness like never before. Ethics, security, sustainability, personal data privacy, and true personalization will be big tests for all luxury brands. Do not fail them, or you will have wasted the few opportunities that a pandemic crisis creates.
A Message From Luxury Institute CEO, Milton Pedraza
Thank you to the Global Luxury Expert Network members who participated from all over the world to help us all learn and reflect. Special thanks to Piero di Pasquale and his wife, Carolina Guthmann, for their phenomenal insights from Italy. This is a moment when we have to practice social distancing. However, mentally, we are all holding hands tightly across the world as we pray and do what we need to do to be safe and keep our elders and children safe. We do it because they are our past, and our future. We who are able, need to take care of the present. This too shall pass, and the entire human race will be so much stronger. Let’s each do our part with courage, kindness and humility, right now, when it counts. We will have losses, but we will be ok. And then, we will thrive again. Guaranteed. Let it be said that the luxury industry was a beacon and met its human and moral obligations, to its employees, partners, clients and society at large. Let’s teach our children by example, and then let’s teach them the lessons learned.
About Luxury Institute And The Global Luxury Expert Network (GLEN)
Luxury Institute is the world's most trusted research, training, and elite business solutions partner for luxury and premium goods and services brands. With the largest global network of luxury executives and experts, Luxury Institute has the ability to provide its clients with high-performance, leading-edge business solutions developed by the best, most successful minds in the industry.
Over the last 17 years, Luxury Institute has served over 1,100 luxury and premium goods and services brands. Luxury Institute has conducted more quantitative and qualitative research with affluent, wealthy and uber-wealthy consumers than any other entity. This knowledge has led to the development of its scientifically proven high-performance, emotional intelligence-based education system, Luxcelerate, that dramatically improves brand culture and financial performance.
To learn more about Luxury Institute, the Global Luxury Expert Network (GLEN), or to become an expert member, please visit Luxury Institute.
Milton Pedraza: mpedraza@luxuryinstitute.com